Toll collector Henry Gregorio of North White Plains works his lane at the Tappan Zee Bridge toll plaza in Tarrytown in March 2009. / File photo/The Journal News

Written by

and Khurram Saeed

It’s no secret that drivers will pay higher tolls to cross the new Tappan Zee Bridge — but they will have to shell out significantly more if the federal government doesn’t lend the state billions of dollars to help fund the $5 billion project.

The New York State Thruway Authority makes the ominous prediction in its request for up to $2.9 billion under the Transportation Infrastructure Finance and Innovation Act, or TIFIA. The newly expanded federal loan program lets states apply for up to 49 percent of a project’s eligible costs.

State officials said additional toll-revenue bonds could be issued to make up for a shortfall in low-interest credit — but warned of dire consequences.

If the Thruway doesn’t get the maximum amount, it will have to impose “significantly higher, earlier and more frequent toll increases at the bridge, impacting the regional economy and job-creating benefits of the project,” officials wrote in their application.

After The Journal News reported in August that projected tolls on the new bridge could nearly triple, Gov. Andrew Cuomo said they were “too high” and asked Thruway officials to form a panel to study how toll costs on a new bridge could be lowered. The cash toll is currently $5.

The state’s TIFIA loan application is being reviewed, federal transportation officials said, and it’s unclear when a decision will be made. Brian Conybeare, special adviser to the governor on the project, said the state has been “working productively” with federal officials.

“The discussions have been very positive, and we have the support of our federal representatives in Washington,” Conybeare wrote recently in an email to The Journal News. “We have said all along that we would apply for the maximum amount available from TIFIA, but the governor has said we need to build a new bridge no matter what.”

In the past, the Tappan Zee replacement could have received a federal grant — money that didn’t have to be paid back — but earmarks for special projects have been virtually eliminated in recent years, state officials said. The state also is looking into aid from the Projects of National and Regional Significance program, a federal fund with $500 million available.

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In the meantime, the focus has been on the TIFIA program. Federal lawmakers poured $1.75 billion into it this year as part of a $105 billion transportation bill. TIFIA will get $750 million in 2013 and $1 billion in 2014. But the government can leverage that lending capacity by 10 times, meaning it can offer $17 billion in credit assistance to the 19 projects competing. Interest rates last week hovered just under 3 percent for a 35-year TIFIA loan.

Toll increases on the new Tappan Zee would be used to pay back the federal loan, but the Thruway wouldn’t have to start those payments until five years after the project has been substantially completed, according to program rules.

Emil Frankel, who served as assistant secretary for transportation policy with the U.S. Department of Transportation from 2002 to 2005, called the state’s loan request “quite ambitious.” Even if New York gets less than $2.9 billion, he said, “it will almost certainly be the biggest credit that’s ever been approved under this program.”

A bridge with a price tag of $4.6 billion would mean the state could get a $2.3 billion federal loan. Three proposals to design and build a new crossing all peg the cost at or below $5.2 billion, officials have said. The exact amount, however, won’t be revealed until a design-build team is chosen, a decision the state expects to make by the end of the year.

Whether the state wins a federal loan hinges on how federal transportation officials view the state’s ability to repay it, Frankel told The Journal News.

“That goes back to the political question in New York state: the level of tolling,” said Frankel, a consultant with the Bipartisan Policy Center, a Washington-based think tank. “That’s the most important thing the TIFIA staff and ultimately the secretary of transportation will look at: Can they carry this loan?”

State officials have said they are confident increased tolls won’t divert traffic from the Tappan Zee, noting there are few alternative crossings in the area. A state analysis found a dramatic increase in tolls would not result in a major decline in traffic. In 2011, the Tappan Zee Bridge produced $127 million in toll revenue, which represented about 20 percent of all tolls collected on the Thruway system. About 50 million vehicles cross the bridge yearly, including 1.4 million commercial vehicles, state records show.

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The Thruway maintains the Tappan Zee Bridge is a good credit risk, citing its 50-year history of collecting tolls. Thruway officials had hoped to bolster their creditworthiness with a 45 percent toll increase for trucks. The Thruway Authority has canceled two meetings since Friday in which a vote on the toll increase was expected. It is not known when the vote will take place.

Even if the state gets federal credit assistance, it will have to issue bonds to cover the remaining project costs.

Bondholders would view the state favorably if it received a TIFIA loan, because paying off bonds is usually prioritized ahead of federal loans, said Christopher Fornal, director and transportation section analyst for BlackRock Municipal Bonds Group based in Princeton, N.J.

The Thruway Authority’s ultimate credit rating won’t be determined until the project’s financing plan is announced. That information, and how it is received by investors, will establish the authority’s ability to sell bonds and at what interest rate, he said.